Euro area employment rising in line with GDP - ECB Study

European Central Bank latest research showed on Wednesday that the Euro area employment is once again growing in line with the gross domestic product (GDP). The study, published Wednesday for the ECB’s Economic Bulletin, suggests that societal change and structural reforms have made the job market more flexible and dynamic. ECB study suggests that employment in proportion to GDP growth is now rising as fast if not faster than before the 2007 debt crisis, particularly in places like Germany and Spain where labour market reform has increased flexibility.

The ECB noted, “The evidence suggests that recent reforms have helped to increase employment. Job gains are also partly due to structural changes under way across the euro area, including ongoing sectoral shifts and compositional changes to the workforce.”

With Eurozone unemployment still hovering around 10 percent and youth unemployment above 20 percent, policymakers have been concerned that a large part of a generation may fall out of the labour market permanently. However, ECB's report bodes well for the region’s economic prospects as a labor-market recovery is crucial for the strength of confidence and consumption.

“Stronger employment growth has doubtless provided support to household incomes, but has also further weakened aggregate productivity growth, which was already notably weaker - even at the sectoral level - than in the pre-crisis period on both sides of the Atlantic. These common trends in productivity growth may imply risks to the long-term growth outlook,” ECB added.